In 1944, a meeting of world leaders was held in Bretton Woods, New Hampshire that would shape global politics for decades to come. The issue at hand was to determine how the global economy would be structured following the devastation of World War II and the instability of power therein. Conference attendees agreed on a few things.
First that we needed strong international institutions to regulate the global economy, and thus was born the IMF. Second, they determined that we needed a country that would serve as the global leader financially and militarily, i.e. the United States. Finally, they agreed that financial liberalization and deregulation was the best way to lift all boats. These were the foundations of Neoliberalism.
This was in sharp contrast to the economic paradigm that preceded Neoliberalism, that of Mercantilism. Mercantilism said that we should have high tariffs, protect our vulnerable markets, and balance our trade deficits.
Globalization hasn’t worked for billions of people
We didn’t see the impacts of neoliberalism until the explosion of globalization that occurred in the early 1970’s with the growth of aviation and the advancement of shipping technologies. Suddenly, companies found a new way to cut costs and increase profits through outsourcing labor and manufacturing.
While the wealthiest members of the West have used globalization as a vehicle to expand their profits, be it through corporate tax inversion or paying worker less than $1 per hour, the poorest have largely suffered. Globalization is arguably a good thing for those in third world countries, because it brings employment, even if the compensation seems insanely low to outside observers. For the working class in Western countries, however, globalization has largely been a negative for them. Take NAFTA for example, where hundreds of thousands of good paying jobs in the manufacturing industry were shipped to Mexico, who could produce for cheaper.
The citizens of the West have a lot of say in global affairs
Economists and political scientists make all kinds of arguments about how globalization and neoliberalism lifts all boats, and they provide reasonably strong evidence to support their argument. That being said, if the middle and working class of Western democracies, who happen to be the most negatively affected group, decide they don’t like neoliberalism they have the potential to get rid of it, or at least scale it back.
That’s exactly what appears to be happening right now. A large western movement against neoliberalism is currently building momentum, and it has an enormous amount of strength in that it unites both sides. On the left, there’s anger about corporations profiting from free trade and outsourcing. On the right, there’s anger towards the immigration that is inherent with a globalized world.
Donald Trump, Bernie Sanders, and Brexit
The US and UK have an enormous amount of say in global affairs. If they were to decide to pull out of trade deals and global centralized banking institutions, neoliberalism as we know it would effectively be over. Many of the citizens in both countries have that very goal in mind.
The central message of Donald Trump’s entire campaign is one of anti-globalization. ‘America First’ suggests that we’re currently far too involved in global affairs and we need to draw back and focus on domestic affairs. Trump has suggested he may seek withdrawal from NAFTA, NATO, and our current trade standards with China. Bernie Sanders’ message isn’t all that different in terms of globalization. His whole campaign was centered around redirecting the wealth of corporations to invest in domestic social programs, and the wealth of corporations cannot be untied from neoliberalism.
Brexit was purely an anti-globalist movement. Boris Johnson and Nigel Farage drove the movement on fear of outsiders freely entering the country due to the European Union’s open immigration policy. Furthermore, although they’ve since walked back this claim, they promised to shift the money they currently send to the EU to invest in a national health program in the UK. After Brexit, some are speculating that we might be entering the beginning stages of the disbandment of the entire European Union as an institution.
We’re not going to revert to the past, but the future may look very different
All this isn’t to suggest we’re going back to a Mercantilist system. We live in a world that has become, in many ways, transnational, and that much is here to stay. That being said, there’s no inherent reason why our current global institutional paradigm of liberalized trade, deregulation, and centralized banking must continue.
If the citizens of the most powerful western countries elect populist leaders who want to bring profits back home, and those leaders work together, there’s a convincing argument to be made that we may be seeing the beginning of the end of neoliberalism as we know it.
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